Revenues are Being Collected and Pennsylvania Has Never Defaulted on a Bond Payment, House Leaders Say in Response to Credit Downgrade

9/20/2017

HARRISBURG – Responding to the credit downgrade from Standard & Poor’s today, House Republican leaders reminded investors and Pennsylvanians that the Commonwealth has never missed a payment and tax revenues are continuously being collected. The leaders also suggested the downgrade could help bring lawmakers together in the effort to address major cost-drivers in the state budget.

Standard & Poor’s previous credit rating was AA-, meaning, according to the corporate website, Pennsylvania had a “very strong capacity to meet financial obligations.” The current downgrade brought the state rating to “A+,” meaning the state has a “strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.”

“Pennsylvanians are paying taxes and it is very disappointing Commonwealth budget costs will increase thanks to a small group of unknown people at Standard & Poor’s who make decisions based on interviews with a governor and press releases from the state’s fiscal officers.

“When those in charge of the checkbook – the same fiscal officers who approved the deficit spending last fiscal year – very publicly refuse to pay bills, even as bank accounts hold billions, of course our credit rating will take a hit.

“This rating agency for years cited the public pension system as a top reason for concern, and this year a bipartisan pension reform plan passed the legislature and is now law – a plan that is fully actuarially sound and will save the Commonwealth billions over the next 30 years.

“Understanding this downgrade is not good news, our members believe we should use it as a wake-up call to deal with major budgetary cost-drivers facing our government.

“While pension reform has become law, we now need to focus on tackling growing entitlement programs and corrections costs. To end growth that appears to be on autopilot, the House earlier this year passed Medicaid and welfare reform to rein in growth, and recent actions in corrections are beginning to take hold, yet more needs to be done. We are committed to doing all we can to ensure the state’s fiscal solvency.

“As the Senate still has the option to concur in the House-passed Fiscal Code, the House, Senate and administration are working together to finalize the necessary components needed to support this year’s budget. In light of the downgrade, we believe it would be beneficial for quick agreement and concurrence in special fund transfers to help the treasurer expedite cash flow while we work on the remainder of the budget-related bills.”